Clarity ahead in LDCs case

Q&A: LDC investigations

The current investigations into corporations tied to Monroe County sound more like a helping of alphabet soup than a political scandal of any significance. But hundreds of millions of dollars of taxpayer money - and questions of whether it is being spent properly - are at the core of the controversy.That said, the investigation is admittedly confusing. With that in mind, here are answers to some of the questions that are commonly asked.

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Question #1

What is an LDC?

A local development corporation, or LDC, is a private nonprofit company, usually established to handle public projects. They have their own governing bodies and rules, though they are quasi-governmental in nature.

Local governments typically help create and then use LDCs because they see them as a vehicle for significant cost-savings. As state Comptroller Thomas DiNapoli has noted in reports, "LDCs generally are not subject to the same requirements and procedures as local governments with respect to borrowing, procurements and certain other matters that relate to implementing a capital project."

AP

Question #2

Who is investigating them and why?

There have been two investigations into Monroe County LDCs -- one by the New York Office of the Attorney General and the other by the FBI. (The FBI has not discussed its investigation, but officials with the LDCs have acknowledged the probe.) The Attorney General's Office in late July 2013 impaneled a grand jury to consider whether individuals connected to the LDCs broke laws. That grand jury has since completed its term.

The investigations are the offspring of work by DiNapoli's office, which has been particularly critical of LDCs here and elsewhere in the state. While the comptroller has acknowledged the benefits of LDCs, he has concluded in numerous audits that they too often operate out of the public eye and can be hotbeds of favoritism in the awarding of contracts.

"There's no way for taxpayers at the end of the day to be assured their money is being used properly," said Brian Butry, a spokesman for the comptroller's office.

AP

Question #3

What are the different LDCs used by the county and what do they do?

Central to the investigations are two LDCs created under the administration of County Executive Maggie Brooks. The county established Upstate Telecommunications Corp., or UTC, in 2004 to upgrade and maintain county computer and phone systems. In 2009, Monroe Security and Safety Systems, also known as M3S, was launched to improve public safety radio and security systems. The operations of both have been criticized by DiNapoli in audits. Other LDCs established by current and past county administrations are the Civic Center Monroe County LDC, which maintains and operates the Civic Center garage; the Monroe Tobacco Asset Securitization Corp., set up to give the county an infusion of cash by issuing bonds and buying rights to the county's expected share of a major settlement among tobacco companies and states; Monroe Newpower Corp., which provides power to county facilities; and the Renaissance Square LDC, created for the downtown project - one combining a public transit bus garage, performing arts center and MCC campus project - that was never built.

Question #4

Who's been criminally charged?

Four people: Daniel Lynch, 50, of Chili, the president of Treadstone Development Corp.; John Maggio, 50, of Pittsford, the president of Navitech Services Corp.; Nelson Rivera, 37, of Hilton, a former information technology manager for the county; and Robert Wiesner, 66, of Webster, a retired Rochester police captain who is married to Brooks. However, the charges against Wiesner were reduced to one charge of bid-rigging after a new grand jury heard his case in 2014.

Lynch originally was charged alone in a much narrower indictment unsealed Oct. 15. A second sweeping indictment was unsealed Nov. 6, expanding on the charges against Lynch and leveling criminal charges against the other three men as well.

The charges vary widely. All the defendants are accused of acting in "combination in restraint of free trade and competition" - essentially charges of bid rigging. Lynch faces 20 counts, including grand larceny, conspiracy and money laundering. Maggio is charged with 10 counts and Rivera faces six. Wiesner is now charged only with the one bid-rigging count.

All four have pleaded not guilty.

Question #5

What did they allegedly do?

All four defendants are accused in some way of rigging bids for contracts through UTC and M3S in favor of certain companies. The favored vendors include Siemens Building Technologies, where Lynch used to be a sales executive; a company headed by Maggio called Navitech Services Corp., which once was the main contractor on two major LDC contracts; and Treadstone Development Corp., where Lynch is president, according to the indictment. The contracts were through two LDCs - UTC and M3S.

Once those agreements were in place, Lynch is accused of stealing money through them by using a mix of fake contracts, inflated subcontracts and false invoices. Maggio is accused of working with him in two of those instances. The cash, in some cases, went to political donations, golf outings and charitable causes, according to the indictment. Both Lynch and Maggio are accused of laundering money they received. They and Rivera also are charged with falsifying business records.

Question #6

What happened with the Wiesner charges?

Wiesner's lawyer filed a motion in court to dismiss the charges against his client because he asked to testify before a grand jury hearing evidence in the case, but never got a chance to do so, as allowed by law. In a Nov. 15, 2013, filing, the Attorney General's Office consented to Wiesner's motion.

The Attorney General's Office presented evidence against him to a new grand jury and gave Wiesner a chance to testify if he wanted to do so. Wiesner's lawyer, James Nobles, has argued that prosecutors have mismanaged the case by leaking news of the indictment to the press and parading the defendants before news cameras. Because of that, Nobles argued that Wiesner should not be re-charged.

The judge overseeing the case, Robert C. Noonan, heard arguments from both sides and ruled after viewing related emails that politics was not a factor in the attorney general's actions.

In November of 2014, a new grand jury indicted Wiesner again on one count of bid-rigging.

Question #7

How have county officials responded?

County Executive Maggie Brooks has defended the county's use of the LDCs, calling them public-private partnerships that are critical to the community. She also has distanced herself from any allegations of wrongdoing and appears to have cast blame on Navitech. Dennis Vacco, a former New York attorney general hired by the county in 2013 to look into LDCs as the investigation intensified, said shortly after the indictment that his review found unspecified "irregularities" in Navitech's management of two major LDC contracts. Both LDCs have severed business ties with Navitech.

Brooks also appointed county Public Safety Director David Moore to both LDCs' boards.

County Legislature Democrats have fought an unsuccessful battle to get their GOP counterparts to have lawmakers conduct their own review of the scandal, saying Brooks has a clear conflict of interest.

Question #8

What does Navitech have to say about all this?

Michael DiPrima, a lawyer for Navitech, has said his client did nothing improper in its management of the UTC contract after the LDC's board voted to cut ties with the company. In fact, it worked closely with the county in executing the contract and met all performance measures, he said.

"There's never been any kind of finding of any kind of impropriety or irregularity on behalf of Navitech," DiPrima has said.

Question #9

What do we know about the defendants?

Let's start with Dan Lynch. Facing more charges than any other defendant, Lynch appears to be central to the criminal case. He was an early player in LDCs - an audit from the Comptroller's Office last year said Lynch worked for Siemens during the creation of Monroe Newpower Corp., an LDC that was created in 2002. A comptroller's audit of M3S singled out Lynch and his company, Treadstone, as having been well-paid with consulting fees on LDC projects. The indictment says Treadstone made more than $2 million off the contracts through Navitech.

Lynch also has been generous to campaigns, donating thousands mostly to Republican campaigns, including the Monroe County Republican Housekeeping Committee and to County Executive Maggie Brooks' campaign account. It is clear Lynch has been generous in other ways, too - he and his wife, Karen, founded the Generosity Store on South Goodman Street in Rochester. Its sales benefit Golisano Children's Hospital and the School of the Holy Childhood. He faces 25 charges.

Question #10

Who is John Maggio?

John Maggio is a local accountant and head of Navitech, a contractor with two lucrative LDC contracts. Navitech has roots at Siemens Building Technologies, which originally had a 16-year, $99.2 million contract with UTC, to upgrade the county's phone and computer systems.

In 2008, Siemens disbanded part of its company that included the employees working on the UTC contract. In December of the same year, some of those former Siemens workers formed Navitech with a new partner - Maggio. UTC's board transferred the Siemens contract to Navitech two days before Christmas that year, the same month the company was incorporated, and Maggio spoke at the meeting. That transfer appears to be one focus of the case and is mentioned in the indictment.

Also a certified public accountant, Maggio has an office on Park Avenue in Rochester. He has been a CPA since 1980, according to the state Office of the Professions website. He faces 10 charges.

Question #11

Who is Nelson Rivera?

Nelson Rivera was the county's chief of information services until he resigned in early October 2013. He sometimes worked as a liaison between the county and certain LDCs, and he formally defended the county's contract with UTC after the state Comptroller's Office sharply criticized it in a 2011 audit. There was scant information available this fall on why Rivera, who started with the county in 2004 and whose salary was $122,038, stepped down.

Democrats in the County Legislature previously questioned whether Rivera had a conflict of interest in the county's dealings with an LDC called Monroe Security and Safety Systems, or M3S. Navitech Services Corp., the company that ultimately landed the contract, listed Rivera as a reference, while Rivera also was a member of the selection committee responsible for awarding the contract, according to a 2009 county memo. He faces six counts in the indictment.

Question #12

Who is Robert Wiesner?

Wiesner, 66, is a retired longtime police captain, former director of public safety at Monroe County Community College and ex-head of security for the Monroe County Water Authority. He also is married to County Executive Maggie Brooks.

It's not clear how he is accused of rigging bids, but his role at the Water Authority previously came into question when it entered an agreement with Monroe County for security improvements at its facilities. The county contracted with a local development corporation, M3S, for the job. Navitech, the company that won the contract, had listed a business associate of Wiesner's as a possible subcontractor in its proposal. That drew criticism from Democrats in the County Legislature, but county officials at the time said no one with business ties to Wiesner would receive any work through the contract.

Wiesner left the Water Authority role in 2011, but was hired back part time in January 2012 through June 2013, when he was paid roughly $118,510.

Question #13

What's next?

The case has moved slowly, partly because of the volume of evidence at play, including millions of pages of documents. No trial date has been set.

As of mid-2015, the defense attorneys have sought to try their clients separately, while prosecutors argued the four men were involved in a "single ongoing plan." Only Lynch has been successful; the judge in the case ruled that he can be tried separately on two of the 20 counts against him, according to Lynch's attorney, Michael Schiano.

Meanwhile, the defense also is seeking to dismiss charges against the defendants. The judge in the case has yet to rule.

Attorney James Nobles, center, addresses the court for his client Robert Wiesner, right, during a hearing in state Supreme Court in late January. The three additional defendants in the case, and their attorneys, listen at left.(Photo: Annette Lein, Staff file photo)

Story Highlights

The AG's Office has been ordered to turn over records that detail some of its in-house decisions

Nelson Rivera is accused of violating what is known as the Donnelly Act, the state's anti-trust law

The AG's Office agrees that it erred by not allowing Robert Wiesner to testify before the grand jury

Over the next few months, there will likely be arguments and decisions that determine the direction of the case. For instance:

The Attorney General's Office has been ordered to turn over records that detail some in-house decisions before the November arraignment of the four. Defense lawyers contend that the records could prove a political calculus behind the prosecution.

Those records could help dictate whether a judge allows the case against one of the defendants, Robert Wiesner, to go forward. A former Monroe County Water Authority security director, Wiesner is the husband of County Executive Maggie Brooks.

Defense attorneys last week filed papers arguing that a number of charges in the 25-count indictment are beyond the statute of limitations. One of the defendants, local businessman Daniel Lynch, is accused in every count. His attorney, Michael Schiano, is arguing that nearly half of those charges should be dismissed.

Lynch, the president of Treadstone Development Corp., has been actively involved with the county-created LDCs. Another of the men facing charges, local accountant John Maggio, founded Navitech Services Corp., which has reaped millions from the LDC work.

Also accused is Nelson Rivera, a former county information manager. He, like the others, is accused of violating what is known as the Donnelly Act, the state's antitrust law.

James Nobles, the attorney for Wiesner, has asked that the case against Wiesner be dismissed. The Attorney General's Office agrees that it erred by not allowing Wiesner to testify before the grand jury, and has asked that the counts against Wiesner be dismissed.

However, prosecutors want to present the two counts Wiesner faces to a new grand jury. Nobles is opposing that step, and wants prosecutors prohibited from continuing a case against Wiesner.

An earlier court date of March 4 has been changed. A new date is expected to be set soon.